Report writing City Developments Limited

Answer Example

CASE 2 :

INDIVIDUAL PORTFOLIO

PREPARED FOR:

PREPARED BY:

MATRIC NO.

NAME

DATE OF SUBMISSION: 14 JULY 2020

Contents

I. Executive Summary

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II. Statement of the Problem

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III. Causes of the Problem

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IV Decision Criteria and Alternative Solutions

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V Recommended Solution, Implementa

tion and Justification

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Reflections of creating the online portfolio

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References

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Appendix

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I. Executive Summary

The automotive sector is the key industries of India’s economy that contributed around 4% to India’s GDP. India’s automotive industries become one of the largest suppliers in the world and expected to rank as the world’s top three in the automotive market. Force Automotive Pvt. Ltd (FAPL) located at Noida-headquartered, is a provider of automotive and engineering services. FAPL group decided to build a new Design Centre at Nashik to secure its future in the automotive market. The Chairman of FAPL, Sankalp Deshmukh is very concerned about this new project and gave full authority to Amitabh Ravinderan to choose his own team for this project.

Amitabh Ravinderan is a Vice President of Research and Development of FAPL and plays a crucial role in the project of Design Centre. He specialises in heat-process treatment, and was recognized as a top talent in the world. In this case, he has been given full power to hire the Head of the Design Centre and Function Heads. After he finalized the candidates for the positions, he meets with the Vice President of Human Resources, Varun Vihan. During the conversation, Varun found that Amitabh is unwilling to follow the recruitment procedures and insist Letter of Intents(LOIs) be released with the reason of time pressure. The normal procedure must go through the antecedent verification before offering the Letter of Intent. As Amitabh insists to offer LOIs without antecedent verification, Varun suspects that he tried to hide something behind him. Thus, Varun called for a confidential investigation on the act of Amitabh. In the investigation, his immediate subordinates, Swati and Lily find out that Amitabh tried to recruit his wife and relatives for the senior positions of Head Design Centre and Function Heads. Amitabh breaches the code of conduct, because he conceals critical information such as the qualification and the relationship of the candidates.

Later, Varun reported to Chairman and called for a meeting with all the head to discuss the matter about the gross violation of the code of conduct by Amitabh. At the end of the meeting, Chairman reiterated that Amitabh is very crucial for this Design Centre project and he didn’t answer a clear resolution for this issue and put the final

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judgement on the hand of Varun. Therefore, Varun has to decide whether to fire him for a gross violation of the code of conduct or let the incident pass.

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II. Statement of the Problem

The Indian companies need to develop a business ethical standard and corporate governance to survive in such high competition global market. With the presence of business ethics in the company, business ethics become strong evidence of its well-established and it will attract stakeholder and shareholders to make a deal or cooperate with the company. The Indian companies are hard to practice and cultivate good business ethics in the workplace because of their cultures such as they tend to derive personal benefits from a decision making and low awareness on business ethics. The “ease of doing business” index is a kind of measurement created by the World Bank to measure how was the regulatory environment conducive to the operation of a company. India was ranked at 134 out of 183 countries in “ease of doing business” which means the business regulations are highly ineffective. In addition, India has a high number of fraud cases and most of the companies faced the conflict of interest issues. Managing fraud has become progressively significant for companies not only to prevent the losses from fraud but also to build a strong internal control.

Hence, Clause 49 of the Listing Agreement to the Indian stock exchange has been formulated that requires the Indian listed companies to adopt the code of conduct and corporate governance practices. In this case, the code of conduct and corporate governance didn’t fully functional in Indian companies as they haven’t a strong stand against misconduct and fraud. Another evidence stated that most of the Indian companies did not provide a platform to report of the breach of code of conduct and neglect the importance of employee background screening. Force Automotive Pvt. Ltd. (FAPL) also doesn’t be excluded in this worst-performing business environmental.

According to the FAPL’s organization structure, FAPL had no audit committee role in its organization and it resulted that FAPL not understanding well in corporate governance. Other than that, the FAPL’s Chairman does not pay attention to business ethics in the working environment. As a leader, he should take his responsibilities to show a good example for his employees, because usually the organizational culture is shaped by the top management.

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Furthermore, FAPL’s code of conduct is not completely developed, for example the employee shall disclose any relationships with supplier and customer only, which does not include the relationships with friends and relatives. This relationships can be very sensitive when the related employee participates in decision making. In this case, the relationship between the candidates and Amitabh is not disclosed during recruitment process and Amitabh does not feel guilty as the code of ethics does not address the relative relationships that must be disclosed. The anonymous reporting practice for business ethics violation also not documented in the FAPL’s code of conduct and employee might be worried to report an ethics concern.

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III. Causes of the Problem

From the root causes of the problem above, it is clear that FAPL needs to improve its business ethical standard and corporate governance. This is a time for Varun to review and restructure the code of conduct and corporate governance. There are suggestions and references that can help Varun in implementing a new code of conduct and corporate governance, which are Malaysian Code on Corporate Governance, recruitment policy, whistleblowing policy and workplace conflict of interest policy. While for the case of code of conduct violation, Varun is recommended to use the McKinsey 7S framework to understand the internal organizational before making the decision of whether fire Amitabh. This will help minimize or avoid the negative effects of his decision.

McKinsey 7S Framework

McKinsey 7S was developed by McKinsey consulting firm in the 1980s. This framework consists of seven elements which are strategy, structure, systems, shared values, style, staff and skills (Figure 1). The consulting firm McKinsey divides these seven elements into two categories: “hard” and “soft” (Table 1). The hard elements are easier to identify in the management compared to soft elements[ CITATION Rav15 l 1033 ].

Hard elements:

1. Strategy element refers to how your company plans a strategy to achieve the goals and gain competitive advantages from the market.
2. Systems are the business activities and procedures that perform by employees.

3. Structure element represents the company’s organization structure and departments.

Soft elements:

1. Shared values element is the key values reflected in organizational culture and business ethics.
2. Style element reflects how the top management operates the company, can be understanding as management style.

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3. Staff element stresses on the number of employees in the organization and how employees be recruited and trained in the organization.
4. Skills element is how the abilities and competencies of the employee.

Malaysian Code on Corporate Governance (MCCG)

Malaysian Code on Corporate Governance (MCCG) is a framework used to govern and direct the company in achieving the company’s objectives and goals. MCCG identified three core principles which are Board leadership and effectiveness, effective audit and risk management, and integrity in corporate reporting and meaningful relationship with stakeholders. Principle A Board leadership and effectiveness is focused on the well-structured of the Board as the roles and responsibilities of the Board plays a crucial role in leading the company toward success. The objective of Principle B effective audit and risk management is to ensuring the transparency and sustainability of the company and managing the risk. Next, Principle C stresses on the transparent disclosure and effective communication with stakeholders to build their trust to the company.

Recruitment Policy

This policy adopts to ensure the fairness of employee selection and recruitment. The hiring manager needs to screen the candidates’ background such as experiences, knowledge and skills and provide the pre-employment assessment to ensure the selected candidate is fulfilling to the job role. Besides, the hiring manager should test their honesty and ethical for the purpose of maintaining a healthy working environment.

Whistleblowing Policy

Whistleblowing policy provides a platform for employees to report any wrongdoing in the company. For an example of wrongdoing, the abuse of authority, the gross mismanagement and the violation of the laws and regulations. This policy objective is to protect the whistle-blower who reports misconduct from being ostracized by their colleagues and discriminated against by potential future employers.

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Workplace Conflict of Interest Policy

The purpose of this policy is to avoid the conflict of interest that occurs in the working environment. The conflict of interest can be defined when an employee pursues personal benefits for himself, friends or family. Thus, the company should implement this policy to make sure its employees are work for the best interest of the company.

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IV Decision Criteria and Alternative Solutions

Before Varun decides the final judgment, he needs to consider that the shortage of time as the Design Centre project is around the corner. At the same time, he needs to look at what the impact on the company is. For example, if he fires Amitabh whether FAPL able to continue with the Design Centre project or FAPL able hires someone to replace Amitabh position. Moreover, the reputation of FAPL is very important as it will affect the profitability and sustainability of FAPL. Varun needs to consider that if the incident is allowed to happen, the reputation of the company as well as the working environment could be damaged.

Based on the decision criteria above, there are three alternative solutions identified to help Varun to solve this issue.

1. Meeting with Amitabh immediately to re-assign the position

Since Varun has sufficient evidences to prove Amitabh has abused the power to recruit his family, Varun needs to plan a meeting with Amitabh immediately. The aim is to discuss re-assign the position of Function Heads and Head of Design Centre. Amitabh’s family members still can be hired, but only as Head Assistants, on condition that they must undergo training courses and workshops. Varun is suggested to prepare an agreement with the terms and conditions; (1) Company agrees to recruit his family members with the position of Head Assistant, but they must comply with the company’s code of conduct, rules and procedures, (2) Amitabh and his family members must have a 5-year bond with the company.

Pros: FAPL can retain heat-process treatment expert, Amitabh to continue serve the company. The Design Centre project can be completed on time. Besides that, it will show that the commitment of the top management in creating a sound ethical environment. FAPL’s employees will be aware of the importance of business ethics.

Cons: FAPL needs to bear the additional costs, such as training costs and salaries. In short time, Varun needs to look for suitable persons for the Head Design Centre

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and Function Heads position. There may be a conflict between Amitabh and Varun that affects the relationship between FAPL and Amitabh.

2. Send the dismissal notice to Amitabh

Second option is to dismiss Amitabh. As Amitabh insists to release Letter of Intents without antecedent verification process, Varun can choose the option to issue a notice to dismiss Amitabh.

Pros: The reputation of the company is secure. All employees will be alerted to this issue and follow the rules and procedures. Investors are assured that FAPL has sound corporate practices and strict adherence to the Code of Conduct.

Cons: The Design Centre project will be delayed because lose an expert employee. FAPL faces difficulties to find someone to replace Amitabh’s position. It will also affect the FAPL’s prospect if the Design Centre project cannot be completed.

3. Let incident pass without any action

Varun also can choose to let the incident pass and take no actions to Amitabh. This option allows Amitabh to recruit his family members.

Pros: The Design Centre project can be completed on time. The relationship between FAPL and Amitabh is not going to be affected. Amitabh continues serve Force Automotive in his willingness.

Cons: In future, other employees will know this issue and lose trust in the values of company. Same to investors, they will lose confidence and will not continue invest in FAPL.

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V Recommended Solution, Implementation and Justification

In this business ethics issue, I recommended that Varun should choose option 1 to minimize the negative impact by having an immediate meeting with Amitabh to re-assign the position. From the aspect of FAPL, Varun can retain Amitabh to continue to serve with the company and lead the Design Centre project. Meanwhile, Amitabh can hire his wife and relatives. This can be known as a win-win strategy for FAPL and also Amitabh.

In accordance with the McKinsey 7S framework, Varun needs to focus on the soft elements that are shared values, skills, staff and style. In order to ensure the issue of violation code of conduct will not occur again, Varun should implement a new organizational style and provide guidelines for employees’ attitudes and behaviors. At the same time, Varun should explain to Amitabh about the elements of skills and staff. The fairness and equality of the recruitment process are important for every company because it definitely will affect the performance of the company in the future and also the trust of employees. The recruitment for the team of Design Centre project should be competencies and skillful to make sure the team formed is able to meet the company expectation. With this framework, Varun can explain the effect in detailed to Amitabh if he insists to hire his wife and relatives.

In addition, Varun can refer to the Malaysian Code on Corporate Governance (MCCG) to establish a sound corporate governance practice. Although Force Automotive is a private limited company, MCCG still applicable to non-listed companies. Under MCCG, it is stated that the audit committee function to make sure the company is operated in transparent and accountable, and avoid any bias at the company. Thus, Varun can suggest to Chairman that establish an audit committee can help FAPL structure a good working environment, and pave the way for the future if FAPL wants to be listed in India. The audit committee should have an expert in accounting and finance and the members of the audit committee must be an independent person.

Next, the code of conduct of FAPL must be included the recruitment policy, whistleblowing policy and workplace conflict of interest policy. There is some best

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example of code of conduct such as Coca-Cola Company and Google. In the Google Code of Conduct, they are not allowed any conflicts of interest that happens in working areas. Varun should clearly establish a statement of workplace conflicts of interest policy to increase awareness among employees. The employees who has a relationship with the certain decision shouldn’t involve in the decision making and the relationship must be disclosed to the company. If anyone abused its power or misconduct in the company, it should be reported to the company. So, Varun should implement the whistleblowing policy, which provides a platform like an anonymous report letter or Google form to collect the feedback from his employees. With this method, FAPL’s employees will be more alert as any person can report them if they misconduct during their work. Lastly, the most important to this case is the recruitment policy. Recruitment policy must outline the step or procedure in hiring an employee. Varun also needs to justify to Amitabh that the importance of consistency of the hiring procedure. Recruitment policy will assist FAPL in clearly describing the job description and also provide a better understanding of the recruitment process to the candidate. A good recruitment policy will increase the credibility of the company. The best way to promote the recruitment policy is public the hiring procedure to the website of FAPL.

Reflections of creating the online portfolio

During this remote learning period, I understand that it is hard to conduct the traditional style exam and I agreed to change the exam assessment to online portfolio. For my personal option, online portfolio is not as easy as the exam. The online portfolio not only tests our knowledge but also assess our soft skills such as presenting the case through online platform and conduct online peer activity. Before this, I do not understand how to use the Padlet platform at all. In this remote learning period, it provides the opportunity for me to learn all this kind of online tools such as Animaker, Biteable, Padlet, Flipgrid and Edpuzzle. During creating this online platform for my student portfolio, I faced many problems as it was my first time to explore these tools and consume time to explore the lot of functions in the tool. But, I believe that all of these skills will be useful in my future.

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References

Google Code of Conduct. (n.d.). Retrieved from Alphabet Investor Relations Google:

https://abc.xyz/investor/other/google-code-of-conduct/

Malaysian Code on Corporate Governance (MCCG). (2017). Retrieved from Securities Commission Malaysia: https://www.sc.com.my/api/documentms/download.ashx? id=70a5568b-1937-4d2b-8cbf-3aefed112c0a

Policies and Practices: Recruitment Scams & Fraudulent Activity. (n.d.). Retrieved from The Coca Cola Company: https://www.coca-colacompany.com/policies-and-practices

Ravanfar, M. M. (2015). Analyzing Organizational Structure based on 7s model of McKinsey. International Journal of Academic Research in and Social Sciences, 43-55.

The McKinsey 7-S Framework. (2015). Retrieved from http://www.sp-management.co.il/wp-content/uploads/2015/03/tools/the-mckinsey-7-s-framework.pdf

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Appendix

Figure 1

Hard elements

Soft elements

Strategy

Style

Structure

Staff

Systems

Skills

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Shared Values

Table 1

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